Entrepreneurs: Co-Founder Issues Driving You Crazy? 7 Simple Insights.

About This Blog

This site is for  entrepreneurs.  A full RSS feed to the articles is available.  Please subscribe so we know you're out there.  If you need more convincing, learn more about the site.

Community

Google+

And, you can find me on Google+

Connect on Twitter

Get Articles By Email

Your email:

Google

Blog Navigator

Navigate By : 
[Article Index]

Questions about startups?

If you have questions about startups, you can find me and a bunch of other startup fanatics on the free Q&A website:

Answers.OnStartups.com

Subscribe to Updates

 

30,000+ subscribers can't all be wrong.  Subscribe to the OnStartups.com RSS feed.

Follow me on LinkedIn

OnStartups

Current Articles | RSS Feed RSS Feed

Entrepreneurs: Co-Founder Issues Driving You Crazy? 7 Simple Insights.

 

The selection, care and feeding of a co-founder (or co-founders) is one of the key determinants of long-term success in a startup. Lots of startups have issues like a lack of market, technology challenges, distribution challenges, etc. But, a lot of these can be addressed with a great founding team (just about all startups tweak their model in order to address challenges along the way). But, if you have the wrong co-founders (or none at all), that's a hard problem to get over.

7 Insights On the Co-Founder Conundrum

1. Dispel the delusion that you don't need a co-founder. You do. You may have all the requisite skills, but even then, co-founders help spread the work and make better decisions. Sure, you can talk to your brilliant self, but that's not as effective.

2. Make sure at least one of the founders can build the product. This is so you don't have to try and outsource the development. Killer apps that delight users and conquer markets are not built by outsourcing. You could also hire your lead developer, but then you need to be *really* good at finding and recruiting this kind of talent. This is hard.

3. Make sure at least one of you can sell. Sure, you can bootstrap and it's not about the money and you want to build something people want, and you're going to be acquired by Google some day, and Google doesn't care about revenues. But, most startups (particularly yours) is going to need to sell something to someone someday. And, by accident, you might someday acquire a taste for something other than Ramen noodles.

4. It helps to have known your co-founder a bit before you start a venture. Unless you're the swashbuckling, risk-taking type that proposes marriage to someone on a train ride to Paris while you're on a 2 week vacation despite there being no alcohol involved, chances are, you don't want to start a company with someone that you haven't spent some time with before.

5. You better like them. If things don't go well (and in the early stages, they don't), you're probably going to spend more time with your co-founders than you do with your significant other. If things do go well, you're going to spend a *lot* more time.

6. Ask all the hard, important questions as early as possible. These include questions about committment, equity, compensation, goals and exits. Here's an article on the topic: Questions You Should Ask Your Co-Founders.

7. Remember that many real great potential co-founders are *already* running their own startups. Be open to creative ways to joining forces with these folks.

So, which insights and ideas do you have on picking co-founders? Are you one of those rare individuals that has succeeded in doing it all alone? Would love to read your experiences and thoughts in the comments.

Posted by Dharmesh Shah on Wed, Nov 21, 2007

COMMENTS

I couldn't agree more Dharmesh. It is this issue that led me to create my current business. I have worked with hundreds of business owners who have failed to achieve their true potential because they didn't understand themselves and the need to bring in people who were compatible in terms of skill base and personality style. I once worked with a guy who was a brilliant designer, but continually brought other creatives into the business. The business was chaotic and we worked towards briniging someone with a more structured and organised approach. The difference it made was nothing less than phenomenal and the finacial value was equivalent. I know I keep going on about this in various forums, but I am a Chartered Psychologist after all. We designed our 21st Century Enttrepreneurs product to help start up entrepreneurs understand themselves and the people they need to recruit and work with. We are currently adopting this approach with many start ups in the UK and it seems to bring great value. Think about the patterns and preferences you have developed throughout your life and then draw people around you who are complementary, and not the same. Best W's D

posted on Wednesday, November 21, 2007 at 12:02 PM by David


PS I love the lively graphic whilst the reply loads up! D

posted on Wednesday, November 21, 2007 at 12:04 PM by David


I agree with Ade on this one. I don't believe a co-founder is required. Bring on the skills that you lack as employees, give them great benefits/compensation, but don't give them controlling power over the major decisions. I've seen too many partnerships/co-founders split over issues they can't agree on.

posted on Wednesday, November 21, 2007 at 1:18 PM by Noah Everett


Having a co-founder is great, but in my opinion the hardest thing about a co-founder is finding one. My first business I started with a friend who I had known since we were 5. We compliment each other very well. My second business I started with a friend who I had known for about a year. He didn't do *anything*, it was like supervising an hourly employee, so I had to kick him out. Anyone want to join a startup?

posted on Wednesday, November 21, 2007 at 10:15 PM by Sean Harper


Hi Dharmesh, Doesn't no. 7 go against the general talk of "absolute focus" for co-founders? Can you elaborate on the kind of creative ways you are referring to - maybe with some examples. Tarun

posted on Thursday, November 22, 2007 at 3:26 AM by Tarun


Tarun My example would be in working with schools. Many of the deliverers of enterprise support to schools are consolidating. The schools are exhausted at having to decide who to work with, so a few businesses are partnering up to offer a more comprehensive service. To a large extent this is just about getting out and talking to business that offer complementary services in markets you serve. It takes time but can be very effective and protect you from being marginalised by the big boys.

posted on Thursday, November 22, 2007 at 4:28 AM by David


All -- See Sean Harper's note above -- I suspect he wasn't kidding. I'm a big fan of Sean's and think he would make an outstanding co-founder. Brian.

posted on Friday, November 23, 2007 at 10:40 AM by Brian P Halligan


Noah & Ade,
I'm going to take Dharmesh's side on point #1. An additional benefit of having a co-founder is that it sends a signal to potential angel (or venture) investors that you were at least able to convince one other person that your idea was a good one and that you are reasonable enough to deal with that you could sign up a partner. Without a co-founder, convincing that first angel investor will be hard because they will ask themselves why you couldn't convince even one other person to get invovled.
Brian.

posted on Friday, November 23, 2007 at 10:44 AM by Brian P Halligan


I'm not going to agree or disagree but would like to apply a broader perspective: Even employees are co-founders. You’re going to hire/partner with/co-found with people you initially trust.

You might use the same types of interview questions that you would a potential employee. Heck, all of them might be used interchangeably (depending on your culture.)

We all know that starts are crazy, whacky, drama-filled, unexpected, and having people you can work with and discuss things with - founder or not, is of immense benefit. You just need people you can trust and you have to trust people.

Our business idea was formed on the basis of trust. I trusted feedback I received and formed the business on the basis of the feedback. Our software was developed out of a relationship of trust. I almost had another founder. I could have trusted them.

Citing someone perhaps a bit more famous than Dharmesh, said of a partner, “You won’t always get (exactly) what you want, but you’ll get what you need.”

Be sure to take enough time out of your busy schedule to think about what you need first.

(Agree with venture vetting perspective but employees can fill that role just as easily as founders)

posted on Saturday, November 24, 2007 at 12:38 PM by John Stack


Great post! Just seeing it now as I'm behind on my blog reading... #1: Absolutely 100% right. There are two kinds of entrepreneurs in the world, those that have a co-founder and those that need one. As a gross simplification, any business has two halves: a product and a sales process. I have never met a coding guru that was good at sales/marketing/biz dev... and I've met even fewer sales/marketing/bizdev people than can code ;-). Finding a co-founder is the first real test of your idea. If you can't convince some else to join you, your idea probably needs work. It's not an easy process, but then neither is starting a business. #2: YES! You simply cannot build a killer app by taking an idea, putting it on paper and outsourcing the development. However, you can find a good CTO and have them scope the thing and outsource pieces of it. There's a fundamental mis-match of goals when you try and outsource a whole product. Your goal is to build something that kicks ass. The outsourcer wants to bill hours. I'm not saying that outsources will exploit you, just that an outsourcing firm will build EXACTLY what you specify, warts and all, without comment. Time and again, I have seen projects where major stumbling blocks arose because of a lack of technical insight. The marketing guy asks for something that is impossibly hard/complex, when something much simpler would work just as well. The outsourcer will happily burn cycles delivering what you specified. This is a classic example of "be careful what you wish for". #3: Amen to that too. Even before you have a product, it's all about sales. You need to sell someone on becoming a co-founder. You need to sell family members, advsiors, board members, early stage investors... All of that takes sales skills, and all of that happens well before you even start selling something for money. #4: Agree, with the caveat that a worthwhile introduction can shorten the "get to know you" stage quite a bit. A key factor here is how well you can read people. If you have a good track record of assessing people well, you can take more of a leap here. For example, I met my CTO though a whirlwind-romance meets speed-dating kind of thing. I knew we'd have time to get to know each other before we reached a critical stage, so I took the risk. However, I've historically been a fairly good judge of character, so I was confident that things would pan out... I also had a backup plan in place in case they didn't. #5: Yup. You will, at some point, annoy the crap out of each other. You cannot put bright people in a pressure cooker set on high 24/7 and not have some blow outs. If you don't like and respect your co-founder, this will get ugly, fast. No business ever launches without bumps in the road. You reduce the odds of it being a killer bump if your team has some glue holding it together. #6: Again, YES! I'm always shocked at how many entrepreneurs avoid the tough questions either because they (a) don't want to discuss it or (b) don't have an answer and think that makes them look bad. I had to get pretty firm with one candidate when I got a "what's in it for me when I make you rich" email. That's something I detest and a sure sign that the person is a poor fit for a startup team. #7: Again, this comes back to how good is your idea and can you sell it. If the idea is good and the co-founder gets it, they will naturally gravitate towards your project. If the idea is good, it becomes a self-solving problem. Great post!

posted on Monday, November 26, 2007 at 11:17 AM by fewquid


I am an entrepreneur currently designing my web application , whilst i am an engineer , i am not a good coder so i am contracting to implement the different parts , and have access to consultants to verify the code , most of my experience has been in building businesses ,more in sales , marketing and leadership, but i am a technologist as well ,and have a good understanding of web technologies , i have gone down the route of having co founders , and none have shown the commitment that i have or even near it , and i don't want to spend most of my time looking for a co-founder, i would rather put that energy to building a solid product and then testing in market , so in this sense i am not in agreement with dharmesh , only time will tell though, but in reality my startup is an evolving entity , i could bring in partners at different stages , provided they really add economic value , which is the main aim of the game . So in a nutshell i am hiring resources where needed , but more importantly building relationships with people who i could possible give equity to , this takes time , in the meantime i don't want to loose sight of my product vision , or put it on hold , just because i don't have a co-founder.

posted on Sunday, December 02, 2007 at 2:16 AM by Jay


Agree great post. But I need the answer to the next logical question. After you have found your co-founder(s) or are brought in, how do you determine equity amongst the founders?

posted on Tuesday, December 11, 2007 at 5:58 PM by Lance


Great comments - but I need some help and fast: I've recently been asked to join a start up as an exec.officer. There is only one founder and I am the first executive hire. I understand that when someone creates a concept and ideas, that they will hold onto those pretty hard when forming the company. However, there are several bumps (some really hard ones) that I am now experiencing because the founder does not want to take into consideration other ways of doing things, even simple suggestions. The founder is a very young man who has never ran a company and spent time in the military. What I am hearing is "don't question my judgement, I want it done this way. When we are up and operating, you can run your department any way you like, but right now I want everything done my way."

So what does a person do with this kind of personality? I guess my real concern is, is that this guy isn't going to listen to other's opinions very well. I was told, "if you can convince me that I should do this or that another way, then go ahead and convince me." That leaves me feeling with the impression that any time I want to consider other options, I have a battle to look forward to.

One other important aspect here, is that we had agreed upon salary, but I have no contract yet (keep in mind I am an employee, not founder or partner). The last time we spoke, the founder indicated he wanted to seek less funding (to maintain more control) and if I would consider what I was willing to sacrifice in terms of salary - in other words, what whould I be willing to get by on. Well - when I heard this, my stress level jumped a few notches. I am relocating away from my family for an interim time period, receiving what I thought (maybe I'm wrong?) below market wages in my area for my position, and will have been working without salary for 4 months or 5 until funding is secured.

I don't know what to think or feel about this. Have I sacrificed enough? Can someone please tell me what a CMO in the Pac. Northwest should expect in a technology start up?
Please help.

posted on Thursday, December 13, 2007 at 3:02 PM by Sydney


It's not good. My answer: run, as fast as you can. This deal stinks from head to toe, and here's why: 1) You say you're an exec hire, but you don't really mention the position. If you are truly being hired as an exec., you should be being hired BECAUSE of your experience and the opinions you bring with you. That's the whole point. If someone is hiring drones, that's different. But hiring an exec with no intention of listening to them reeks of inexperience, poor judgement and a low chance of success. 2) "The founder is a very young man who has never ran a company and spent time in the military." Doesn't matter if he's the smartest guy on the planet. He needs execs with experience to make his company work. At some level he knows this, but there is clearly a disconnect (see previous point). Young guy, no experience, and a huge attitude are HUGE red flags. 3) "don't question my judgement, I want it done this way. When we are up and operating, you can run your department any way you like, but right now I want everything done my way." Then he should do it himself. Oh, wait, he can't. That's why he hired you. Seriously, this guy sounds like a nightmare and has no clue what he's doing. 4) "So what does a person do with this kind of personality?" I've hit this in three companies I've worked for. There are only two outcomes: the person concerned was sidelined and eventually removed from day-to-day operations at the company, or the company failed. It was that simple. His whole approach is nonsensical, and again, reeks of inexperience and an out of control ego. "That leaves me feeling with the impression that any time I want to consider other options, I have a battle to look forward to. " Yup. And a temper tantrum. And other behavior befitting a 2 year old. 5) "One other important aspect here, is that we had agreed upon salary, but I have no contract yet (keep in mind I am an employee, not founder or partner). The last time we spoke, the founder indicated he wanted to seek less funding (to maintain more control) and if I would consider what I was willing to sacrifice in terms of salary" This is bullshit, pure and simple. Startups usually pay less than established companies, but they offset the risk with equity. Sounds like you aren't seeing much of a share (a real first exec hire should be in the range of 1-5% of the equity in the whole company) and you're not getting the salary either. What the hell is in it for you? You are taking a LOT of risk by joining a startup (and I LIKE startups). It's not just the lower income, stress and lack of security, it's the opportunity cost too. Lets say you join this company, work hard for 3 years and it crashes hard. If you are this guy's parrot for that time, and it ends badly, you're not going to want to promote that to future employers. At the same time there's the loss of salary and experience you could have gained in another position. This guy can't have his cake and eat it too. The fact that he is unexpectedly reneging on an earlier conversation is also a HUGE CLUE that you should run and not look back. 6) "will have been working without salary for 4 months or 5 until funding is secured." Okay, now you're scaring me. As someone that has been actively raising money on several occasions, I can tell you that it NEVER takes 4-5 months. Think 12-18 months from when you get your shit together. If he hasn't decided how much to raise and doesn't have an exec team in place, he's at square 1. 4-5 months is a joke. You will NOT see a paycheck within that timeframe. 7) "I don't know what to think or feel about this. Have I sacrificed enough?" I'm going to go out on a limb here and say that I think you haven't had a lot of startup experience. It sounds to me as though you've been offered a title that's caught your attention. But it's not real. Titles are largely meaningless in a startup. Doubly so when the guy with control makes it clear that he won't share. I'm starting my second company, have worked for two other startups and done two startup-like turnarounds. This founder sounds like a royal ass. He wants you there so he can claim he has execs on the team, but he has no respect for your opinion. Not only that, he's putting no skin in the game (equity) and renegotiating things that have already been decided (salary). Frankly, unless the company has revenue, it's odd that he would even commit to a salary in the first place. This sounds like an utter nightmare. It doesn't matter how good a startup's idea is. No idea survives being let out in the wild without getting changed. Good changes happen when there is a team that pulls together. In a startup, everything revolves around the team. Any investor worth a damn will say the same thing. Seriously, if you knew about the Titanic before it sailed, and knew the most likely outcome, you wouldn't really get on board, would you? Yes, this really sounds THAT BAD.

posted on Friday, December 14, 2007 at 12:22 AM by fewquid


To Fewquid - I left the start up. Had a long conversation about fundamentals, but there was clear divide about right and wrong. You asked about my experience with start ups - I do have that, but not at the seed stage and that is where all the trouble is for this one venture. Experiences like this teach you what to do and more importantly, what not to do.

posted on Monday, December 17, 2007 at 11:04 AM by Sydney


Wise move. Willingness to listen to your team and the market is critical at seed stage...

posted on Tuesday, December 18, 2007 at 2:33 PM by fewquid


Fascinating post. I have skills in non-technical areas, but I am slowly learning programming and the other necessary technical pre-requisites for building killer apps. My goal is to co-found with someone technical, and to do that I need to create an inventory of my skills. This post helped me to understand some of the key skills I can offer, as well as the possibilities for creative compensation arrangements. Thank you all for your great insights.

posted on Wednesday, January 09, 2008 at 5:45 AM by Dan hodgins


Having done a bootstrapped startup on my own and another with a partner, I agree with Dharmesh: Partners are easier. 
 
I've always considered myself a loner; even today I like to work alone and I take pride in personal accomplishment. 
 
But the hard times are hard. I had my wife. If you don't have someone like that who truly understands, it's going to be harder. 
 
Yeah, you can do it alone. I did. But happiness has to count in there somewhere.

posted on Saturday, November 29, 2008 at 10:17 AM by Jason Cohen


After two start-ups, I strongly agree with Dharmesh. My only challenge is finding a co-founder that one would have known for some time, especially if your are looking for a CTO co-founder. 
 
I live in South Africa and many high tech persons are not willing to take risk in business just because of the environment. On all other points, you are so right. If you value the person, then you have to trust him or her. 
 
Challenge; where can one find potential CTO co-founders? Wouldn't it be nice if a group existed in say LinkedIn for something like that?

posted on Tuesday, January 27, 2009 at 6:04 AM by Tabi Tabe


Comments have been closed for this article.